What To Do With Wix's Stock?

Cloud-based web development platform Wix.Com Ltd (NASDAQ: WIX) reported Tuesday its third-quarter results, which came in better than expected but management's fourth quarter guidance fell slightly short of consensus estimates.

Here is a summary of what some of the Street's top analysts are saying after the print.

• Barclays' Deepak Mathivanan maintains an Overweight rating on Wix with a price target lowered from $125 to $115.
• Bank of America's Nat Schindler maintains at Buy, unchanged $118 price target.
• KeyBanc Capital Markets' Brent Bracelin maintains at Overweight, price target lowered from $133 to $122.
• Wedbush's Ygal Arounian maintains at Outperform, unchanged $123 price target.

Wix traded around $89.44 at time of publication, down 2 percent.

Barclays: What's Good And What To Watch For

Mathivanan said Wix's third-quarter report is highlighted by average revenue per subscription (ARPS) accelerating to 11 percent from a year ago, more than 500,000 registered users using Code (and more than 100,000 are engaged on the platform), and the new Payments unit offers a path to $100 million in incremental revenue.

On the other hand, certain concerning items need to be paid attention to, including premium subscriptions only rising by 177,000, which implies a 6 percent year-over-year drop. Management's guidance implies net adds will remain under pressure; Despite a revenue beat, management didn't lift the mid-point of its full year outlook.

Bank Of America: Above The Competition

Wix's report details multiple new product lines and vertical expansions, the "most interesting" of which is Wix Payments, Schindler said in a note. The new business offers a payment processing platform through the Wix website and could generate $13 per user per month in new revenue, or $64 million. Encouragingly, the company said it will introduce a new product in December which will "elevate how small businesses are managed and grow online."

Schindler said the company's ability to "rapidly fire" new product launches makes it stand above its competitione.

KeyBanc: More Conservative Price Target

The bullish case for Wix remains unchanged based on a multi-year transformation to a full-service cloud platform provider, Bracelin said. However, the small and medium-size business SaaS group has seen "substantial" compression in their stock multiples amid concerns of an economic slowdown. Wix should be no exception and the research firm's new price target is based on a more conservative EV/S multiple of 7 times 2020 estimates versus a prior multiple of 9.5 times 2019 estimates.

Wedbush: Reasonable Trade-Off

Wix's report shows a deceleration of user growth and premium subscribers but at the expense of the company building an entire product suite marketed towards SMBs and larger organizations, Arounian said in a note. This trade-off is "sensible" as it sets the company up for 2019 and beyond with new monetization tools that will result in average revenue per user growth and better conversion.